Zive v. Stanley Roberts, Inc.

Decision Date24 February 2005
Citation182 N.J. 436,867 A.2d 1133
PartiesStewart ZIVE, Plaintiff-Respondent, v. STANLEY ROBERTS, INC., Defendant-Appellant.
CourtNew Jersey Supreme Court

Carl A. Salisbury, argued the cause for appellant (Killian & Salisbury, attorneys; Mr. Salisbury, Clark and Steven R. Weinstein, Livingston, on the briefs).

Neil H. Deutsch, Hackensack, argued the cause for respondent (Deutsch Resnick and Pashman Stein, attorneys; Mr. Deutsch and Jonathan I. Nirenberg, on the briefs).

Richard M. Schall, Moorestown, argued the cause for amicus curiae National Employment Lawyers Association/New Jersey (Schall & Barasch, attorneys).

Craig H. Livingston, Princeton, submitted a brief on behalf of amici curiae The New Jersey Advisory Council on Safety and Health, The New Jersey Council of the International Association of Machinists and Aerospace Workers, AFL-CIO (Ball Livingston, attorneys).

James R. Michael, Deputy Attorney General, submitted a brief on behalf of amicus curiae New Jersey Division on Civil Rights (Peter C. Harvey, Attorney General of New Jersey, attorney; Jeffrey Burstein, Assistant Attorney General, of counsel).

Justice LONG delivered the opinion of the Court.

The appeal provides us with an opportunity to clarify an issue that has dogged courts across the nation: on a Law Against Discrimination (LAD) termination claim, what is the plaintiff's evidentiary burden that will satisfy the second prong of the prima facie case under the McDonnell Douglas1 burden-shifting scheme. We hold that so long as the employee shows that he has been performing in the position from which he was terminated, the second prong is fulfilled. We further hold that the quality of the employee's performance does not come into play on the plaintiff's prima facie case.

I.

Because the case comes to us on Stanley Roberts's appeal from the denial of its motion for a directed verdict, we accept as true all the evidence supporting Zive and accord him all legitimate inferences. R. 4:40-1; Verdicchio v. Ricca, 179 N.J. 1, 30, 843 A.2d 1042, 1060-61 (2004)(noting that both Rule 4:40-1 and Rule 4:37-2(b) are governed by same standard: "[I]f, accepting as true all the evidence which supports the position of the party defending against the motion and according him the benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied" (citations omitted)).

So viewed, the following are the facts of the case: Stanley Roberts, an importer of flatware for retail sale, hired Zive in May 1991 to head its new "Homeworld" division. Prior to working for Stanley Roberts, Zive had substantial experience as a sales executive.

Between 1991 and 1994, Homeworld's sales steadily increased from $905,000 to $2 million. In 1995, sales declined for the first time to $1.7 million and in 1996, to $1.3 million. To help meet sales goals, Zive hired an assistant, Tom Garda, and Homeworld's sales increased to $1.8 million in 1997.

Despite the fact that Homeworld had never earned more than $2 million, Edward Pomeranz, the president of Stanley Roberts, told Zive that Homeworld needed $2.5 million in yearly sales to justify keeping the division open. Zive thought that Homeworld would earn that amount in 1998 and agreed to meet the goal. In September 1998, Garda was asked to head another division and reduced the time he spent with Homeworld. By October of 1998, it was apparent that Homeworld would not achieve the sales goal; instead, it reached only $1.5 million. Those numbers were not explained; however, sales for the entire company declined substantially in 1998.

Although Zive admittedly was unable to reach the $2.5 million sales goal imposed by Pomeranz, and there was discussion of possibly closing Homeworld, neither Pomeranz nor any other Stanley Roberts official ever suggested, even obliquely, that Zive was in danger of losing his job. The only discussion of his employment occurred when Pomeranz mentioned a potential move from a salaried to a commissioned position.

Zive suffered a debilitating stroke on December 3, 1998 that paralyzed the left side of his body. According to Zive, Pomeranz visited him in the hospital and told him to "hurry up and get better and get back to work" and asked Zive to attend the Chicago Housewares show in January 1999. After the stroke, he worked from home, talked to Garda and to his secretary by phone, and reviewed business reports.

The last time Pomeranz actually saw Zive before the firing, which took place by telephone, the effects of the stroke were still obvious. Zive was limping, needed a cane, and had to speak slowly in order to be understood. On March 8, 1999, after rehabilitation, Zive called Harold Pomeranz, the Chairman of the Board of Stanley Roberts, to state that he was ready to return to work. He was told that his "services would no longer be required" and was offered a severance package of $20,000 plus medical insurance for a year. Zive went to the office on March 15, 1999 but was unsuccessful in saving his salaried position.

Stanley Roberts issued a memorandum on March 22, 1999, advising Homeworld Sales Representatives that Zive was no longer with the company and instructing them to "[c]ontinue to direct all inquiries [regarding Homeworld] to Tom Garda and Tina Patterson, as we are going to continue with the division." (emphasis added). According to Zive, Stanley Roberts never closed Homeworld and subsequently replaced Garda with another employee, Mel Rudy, who performed essentially all of Zive's former job functions.

On June 24, 1999, Zive brought this action, claiming discriminatory discharge in violation of the LAD. At trial, Stanley Roberts moved for a directed verdict, claiming that Zive had not presented a prima facie case of discrimination because he failed to prove that he had met the "legitimate expectations of his employer" under the test formulated in Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 597, 538 A.2d 794, 805-06 (1988), to adapt McDonnell Douglas to a termination case. The trial judge denied that motion, and the case proceeded to the jury. The trial judge also denied Stanley Roberts's request that the jury be charged on the elements of the prima facie case. The jury found that Stanley Roberts terminated Zive after his stroke, used the stroke or its effects as a determinative factor in the firing, and awarded Zive $225,000 in compensatory damages and $75,000 for pain and suffering. Stanley Roberts appealed.

The Appellate Division affirmed, holding that a discharged employee in a LAD case need not show that his performance met his employer's subjective legitimate expectations but need only show that he was "objectively qualified" for the position. The court equated objective qualification with basic performance, holding that because Zive had worked for Stanley Roberts for eight years and had been "actively engaged in the management and administration of Homeworld," there was "more than a scintilla of evidence that he was objectively qualified for the position he held."

In ruling, the Appellate Division refused to accept the $2.5 million sales target as an "objective" measure of Zive's performance because it involved "external and internal, tangible and intangible factors," such as the market for the product, the market share and reputation of the company, the economy, the competition, and the commitment of the company to spend time and money to meet the target. Rather than objectively measuring Zive's performance, the Appellate Division viewed the $2.5 million as a subjective goal established to determine whether Homeworld was "worthy as a permanent extension of defendant's established lines of business."

Finally, the Appellate Division approved the trial judge's decision not to instruct the jury with regard to the burden-shifting analysis of McDonnell Douglas and to pose only the ultimate issue of whether Zive proved an act of discrimination by a preponderance of the evidence.

We granted Stanley Roberts's petition for certification. Zive v. Stanley Roberts, Inc., 179 N.J. 373, 845 A.2d 1255 (2004). We also granted amicus curiae status to the New Jersey Division on Civil Rights, the National Employment Lawyers Association/New Jersey, the New Jersey Advisory Council on Safety and Health, and the New Jersey Council of the International Association of Machinists and Aerospace Workers, AFL-CIO.

II.

On appeal, Stanley Roberts argues that it was entitled to a directed verdict because Zive did not satisfy the second prong of the prima facie burden under the LAD insofar as he failed to prove "that he was performing his job at a level that met his employer's legitimate expectations." Clowes, supra, 109 N.J. at 597,538 A.2d at 805 (quoting Loeb v. Textron, Inc., 600 F.2d 1003, 1014 (1st Cir.1979)). Stanley Roberts also contends that the Appellate Division incorrectly used the pre-Clowes"qualified for the position" standard, which effectively eliminated Zive's prima facie burden. In addition, Stanley Roberts argues that the trial judge improperly refused to instruct the jury on Zive's prima facie burden. Finally, Stanley Roberts contends that Zive did not satisfy the fourth prong of the prima facie burden because no one replaced him as the head of Homeworld; the position was eliminated entirely.

Zive counters that he needed only to show that he was "objectively qualified" to satisfy the second prong of his prima facie case, and that he did so by proving that he held the position as head of Homeworld for an extended period of time. He further argues that no trial error, warranting our intervention, occurred.

The amici argue that the second prong analysis is an objective one that is to be judged without resort to an employer's subjective views. They contend that because plaintiff's burden on the prima facie case is intended to be modest, so long as he can show that he was qualified to...

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